The Olympics Assessments are starting to Roll in

Here is the first.

Interesting that the New York Times says, the RE Development industry in Vancouver is UNUSUALLY powerful and was the main driver for the big O.

http://www.nytimes.com/2010/02/25/sports/olympics/25vancouver.html?sudsredirect=true

CHMC is part of the problem not the solution

I'm back and I am not happy....about losing to the US in hockey and about the CHMC.

I cant do much about the hockey, except complain that they should have had Luongo in the net.

However we are having more success with the CHMC. The mainstream media is finally waking up to what we have been saying in the blogosphere for years. The CHMC is distorting the housing (and lending) market and is a huge added liability the tax-payer does not need.

Here's a good summary which many of you may have already read:

http://housing-analysis.blogspot.com/2010/02/cmhc-canadas-moral-hazard-corporation.html

$480 Billion in insured mortgages is an astronomical amount for a small country like ours! What is the Government thinking?? Are our politicians that numerically challenged?

We better hope that housing doesn't collapse or we will all be in deep....

$480 Billion would be $4.8 Trillion for a country the size of the US. It is almost as much as our national debt: http://www.debtclock.ca/

Now of course it isn't all at risk, but once again I say (for the hundredth time)...TO CONTINUE INSURING LOW DOWN-PAYMENT/HIGH LEVERAGE Mortgages WHEN

1) Housing is at all time highs in many parts of the country

2) Interest rates are at all time lows

IS JUST PLAIN STUPID. If there are any fiscally prudent politicians out there please stop this time-bomb.

Think about it...if you were going to buy a used car with next-to-nothing down and poor credit history, you go to one of many 'bad credit, no credit, no problem' lenders and they arrange a high-interest loan and you get the keys.

BUT THE TAX-PAYER DOESN'T INSURE IT!

There is a fear of changing anything in Canada, even when we have seen it fail south of the border.

Remember Canwest begging for a bail-out or newspapers and TV stations would all close down. The Conservatives were, in my opinion, very close to giving them some of your money.

But there was a grass roots revolt and they backed off, and now some channels have been bought by employees, others have been bought by Shaw and the newspapers will stand or fall depending on their locals markets.

The world did not end.

A moratorium on the CHMC will not end the property market.

There is no right to own a home. It is not a bad idea, if you want to and if you can afford it and if you assume the risk.

If you cant afford it, and we assume the risk. DONT OWN.

I dont own and I don't feel deprived. Lets spend those billions on better education and free food for poor kids which is something that is a right, in a reasonable society.

I am now going to put my head in the freezer for a few minutes to cool down.

The New Federal Mortgage Rules.

A quick post from my holiday.

The new Federal Mortgage Rules, which are the worst kept secret in the country, are likely to be announced tomorrow by Minister Flaherty.

There is lots of analysis on the net, see Vancouver Condo Info for a quick summary.

Here is my 2 cents. In one sentence..

Too little too late.

Lets think about it. The BOC and drop rates to the same level as near bankrupt countries like the US, even Europe which is in worse shape didn't drop that low. Then the Government increases the CHMC borrowing capabilities, doubling it, despite what happened in the US with Freddie and Fannie and sits back while folks are pulling out 95% of their equity or buying with 5% down and then say..

"Where did this housing bubble come from??"

" What's that? If I mix gasoline and tinder and add a match we get a big fire... wow I didn't know that"

It came from the policies, of encouraging debt and speculation and absentee owners, and all back-stopped by the tax-payer.

Anyway these changes are more important for their optics than their effect. Everyone is now saying we are in a bubble and this needs to be dealt with.

Of course if we were serious, we would shutter the CHMC for six months too. that's what the Chinese just did. They told their banks to just stop lending to try and break the bubble in Shanghai and Peking.

Imagine if we stopped CHMC-backed mortgages and banks had to lend high leverage loans on risk to their own balance sheets. And imagine those same banks were told, that losses which lead to policy change (bail-outs or fiscal accomodation) would lead to a complete change of the senior management...then we would see some real action.

However our politicians and bankers don't really want housing to return to a reasonable multiple of income, they want to show their clean hands and say.."We did what we could. It is all your own fault".